The DCIT, Circle-1(1), Ahmedabad V. Dharamdev Finance Pvt. Ltd., Ahmedabad

ITA 3421/AHD/2007

• Counselvise Citation: 342120514 RSA 2007
• Duration Of Justice: 4 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-01-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 06-08-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K GUPTA
• Assessee Lawyers: S N DIVATIA
• Keywords: Unexplained cash credit; Loose papers; Opportunity of being heard; Additional evidence; Third party statement; Non compliance; Onus to prove
• Section: 68

Judgement Text

-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI D K TYAGI - JM AND SHRI A MOHAN ALANKAMONY - AM ITA NO.3421/AHD/2007 (ASSESSMENT YEAR:-2005-06) THE DEPUTY COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE-1(1), AHMEDABAD V/S DHARAMDEV FINANCE PVT. LTD., E/4, GHANSHYAM PARK, ANAND NAGAR SOCIETY, FATEHPURA, PALDI, AHMEDABAD PAN: AABCD 3915 F [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI S K GUPTA, CIT DR ASSESSEE BY:- SHRI S N DIVATIA, AR DATE OF HEARING:- 25-01-2012 DATE OF PRONOUNCEMENT:- 29-02-2012 O R D E R PER D K TYAGI (JM) :- THIS IS REVENUES APPEAL AGAINST AN ORDER DATED 29-05-2007 PASSED BY THE LEARNED COMMIS SIONER OF INCOME-TAX (APPEALS)-I, AHMEDABAD [HEREINAFTER REFE RRED TO AS THE LEARNED CIT(A)] FOR ASSESSMENT YEAR 2005-06. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- [1] THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN ADM ITTING THE FRESH EVIDENCES AND CONSEQUENTLY DELETING THE ADDITIONS P ARTICULARLY WHEN HE HIMSELF HAS DISMISSED THE ASSESSEE'S GROUND AGAINST THE EX-PARTE ORDER AND THE GROUND OF NOT PROVIDING ADEQ UATE OPPORTUNITY OF BEING HEARD. 2 [2] THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN ADM ITTING ADDITIONAL EVIDENCES IN VIOLATION OF RULE 46 A OF T HE I.T. RULES AS NONE OF THE CONDITION THEREIN WAS SATISFIED. [3] THE C1T(A) HAS ERRED IN LAW AND ON FACTS IN ADM ITTING ADDITIONAL EVIDENCES DURING THE APPEAL HEARING BY I GNORING THE ASSESSING OFFICER'S OBJECTION FILED VIDE LETTER DAT ED 26-03-2007. FURTHER, THE CIT(A) ALSO ERRED IN DIRECTING THE ASS ESSING OFFICER LO FURNISH A REMAND REPORT ON THE ADDITIONAL EVIDEN CES SUBMITTED BY THE ASSESSEE AND IN CONSEQUENTLY DEL ETING ADDITION OF RS.1,77,86,645/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS. [4] THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,70,11,830/- MADE ON ACCOUNT OF UNE XPLAINED CASH CREDIT IN THE NAME OF SHRI HARI BUILDERS WITHO UT CONSIDERING THE FINDINGS OF THE A.O. RECORDED IN TH E ASSESSMENT ORDER AS WELL AS IN PARA 3.1.1. OF REMAND REPO RT DATED 22.05.2007. [5] THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOL DING THAT FILING OF RETURN OF INCOME IS NOT REQUIRED FOR PROVING THE CASH CREDIT, WITHOUT CONSIDERING THE FACT THAT PROPRIETOR OF SHR I HARI BUILDERS WAS NOT PRODUCED FOR EXAMINATION BEFORE TH E A.O. AND HE HAD NEVER FILED RETURN OF INCOME WHICH WAS NECES SARY TO ESTABLISH THE IDENTITY AND CREDIT WORTHINESS OF THE DEPOSITOR. [6] THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.1,44,56,390/- MADE ON ACCOUNT OF UND ISCLOSED INCOME FROM SHARAFI BUSINESS FOUND RECORDED ON SEIZ ED DOCUMENTS AT PAGE 138 TO 140 OF ANNEXURE A 20, WITH OUT CONSIDERING THE CONTENT OF THE SEIZED DOCUMENT AND FINDINGS OF THE A.O. [7] THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ABOVE ADDITION BY HOLDING THAT THE TRANSACTION PERTAIN TO TRANSACTION BETWEEN RAKESHBHAI THAKKAR, INDIVIDUAL AND HIS PROP RIETARY CONCERN, M/S SATYA DEVELOPERS, WITHOUT CONSIDERING THE FACT THAT THE SEIZED DOCUMENT ALSO CONTAINED THE NAMES O F THIRD PARTIES SUCH AS BHARATBHAI, CHANDLODIA, RAKESHBHAI, RATANPOLE, JETHIBHAI GADHVI, PULINBHAI SHETH AND SUSHILABA. 3 [8] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. [9] IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE AO BE RESTORED TO THE ABOVE EXTENT. 2 GROUND NOS.1 TO 3 IN THE APPEAL RELATE TO VIOLATI ON OF RULE 46A OF THE INCOME TAX RULES. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORDS, WE FIND THAT ON THE ADDITIONA L EVIDENCES ADMITTED BY THE LEARNED CIT(A), REMAND REPORT FROM THE AO WAS OBTAINED BY THE LEARNED CIT(A) AND, THEREFORE, THER E IS NO VIOLATION OF RULE 46A OF THE IT RULES. THE GROUNDS ARE THEREFORE DISMISSED. 3 AS REGARDS GROUND NOS.4 AND 5, THE FACTS OF THE C ASE AS NOTED BY THE LEARNED CIT(A) IN HIS ORDER ARE THAT T HE ADDITION OF RS.3,54,70,163/- MADE IN THE ASSESSMENT ORDER ON AC COUNT OF CASH CREDITS IN RESPECT OF DEPOSITS IN THE NAMES OF 52 D IFFERENT PERSONS IN THE BOOKS OF THE ASSESSEE AS NARRATED IN THE ASS ESSMENT ORDER AND IN THE CIT(A)S ORDER. THE ASSESSEE WAS REQUEST ED TO FURNISH LIST OF DEPOSITORS WITH THEIR NAMES, ADDRESSES, THE IR OPENING BALANCE, ADDITIONS, REPAYMENTS, INTEREST PAID / CRE DITED ETC. THE ASSESSEE WAS ALSO ASKED TO FURNISH CONTRA ACCOUNT, P.A. NO. OF DEPOSITORS IN RESPECT OF THE FRESH CREDITS. ACCORDI NG TO THE AO, THE ASSESSEE HAD MADE PART COMPLIANCE GIVING LIST O F DEPOSITORS, COPIES OF THEIR ACCOUNTS FROM BOOKS OF THE ASSESSEE . HOWEVER, CONTRA CONFIRMATION, AND PA NO. OF CREDITORS WERE N OT FURNISHED. THE A.O. HAS THEREAFTER SUMMARIZED DETAILS FURNISHE D BEFORE HIM IN RESPECT OF DIFFERENT CASH CREDITS IN THE ASSESSM ENT ORDER AND 4 STATED THAT DURING THE YEAR THE ASSESSEE HAS ACCEPT ED TOTAL CASH CREDITS OF RS.35,40,70,163/-. HE HAS REFERRED TO V ARIOUS COURT DECISIONS AND STATED THAT THE ASSESSEE HAS TO IDENT IFY THE CREDITOR, GENUINENESS OF TRANSACTIONS AND CREDIT WORTHINESS O F THE CREDITOR. IT IS STATED THAT THE ONUS IS ON THE ASSESSEE TO PR OVE THE SAME. FOR THIS, HE HAS ALSO REFERRED SECTION 68 WITH REFE RENCE TO THE ABOVE OBSERVATIONS. HE HAS ALSO REFERRED TO PROVISI ONS OF INDIAN EVIDENCE ACT AND OTHER CASE LAWS IN S UPPORT OF THE ABOVE OBSERVATIONS AND STATED THAT THE ASSESSEE WAS ASKED TO PRODUCE THE CREDITORS TO VERIFY THE CASH CREDITS BU T THE ASSESSEE HAS NOT FURNISHED NECESSARY EVIDENCES TO PROVE THE GENUINENESS OF THE CASH CREDITORS. HE HAS ALSO STATED THAT SOME OF THE CONCERNS WERE ASSESSED IN HIS CIRCLE FROM WHOM DEPO SITS ARE RECEIVED ARE VERIFIABLE FROM THEIR RECORDS AND THE SAME ARE CONSIDERED. AFTER THE ABOVE OBSERVATIONS IT IS STAT ED THAT THE ASSESSEE HAD FAILED TO DISCHARGE HIS ONUS TO PROVE THE GENUINENESS, CREDIT WORTHINESS AND CAPACITY OF THE DEPOSITORS. HENCE HE HAS MADE THE ADDITION AS ABOVE. 4 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FI LED AN APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A ) HAS NOTED THAT WITH REFERENCE TO THE CREDITS IN CAPITAL ACCOU NT IN THE BOOKS OF DIFFERENT PROPRIETARY CONCERNS, THE ASSESSEE HAS FURNISHED COPIES OF ACCOUNT OF HIS PERSONAL BOOKS, BANK ACCOU NTS ETC. SO FAR AS THE CREDITS IN THE ACCOUNT OF DIFFERENT DEPO SITORS ARE CONCERNED, THE ASSESSEE HAD FURNISHED COPIES OF ACC OUNT OF THE CONCERNED PERSONS AND THEIR CONTRA ACCOUNTS ALONG W ITH CONFIRMATION. IT WAS ALSO STATED THAT THE AMOUNTS W ERE RECEIVED 5 BY ACCOUNT PAYEE CHEQUES. IT WAS FURTHER SUBMITTED THAT THE MATTER BEING VERY OLD, THE ASSESSEE WAS UNABLE TO O BTAIN THE CONFIRMATION BEFORE THE ASSESSMENT WAS COMPLETED ON ACCOUNT OF INADEQUATE TIME AVAILABLE TO HIM. HOWEVER, IT IS SU BMITTED THAT THE ABOVE DETAILS MAY BE ADMITTED AS ADDITIONAL EVI DENCE AND THE SAME MAY BE CONSIDERED FOR THE FOLLOWING REASONS: 'NOW COMING ON TO OUR SUBMISSION WE FIRST OF ALL AG REE WITH THE PRINCIPLE OF LAW MENTIONED IN THE ORDER THAT THE BU RDEN IS ON THE ASSESSEE TO PROVE THE LOAN/CREDIT TAKEN DURING THE YEAR IN BOOKS OF ACCOUNTS. BUT FOR PROVING THE CREDITS SOME TIME HAS TO BE GIVEN MORE SO IN TYPE OF CASES AS THIS ONE .WHERE SIMULTANEOUS SIX YEARS ASSESSMENT PROCEEDINGS WERE COMPLETED IN APPELLANTS CASE ALONG WITH 6 OTHER GROUP CONCERNS NAMELY SHRI DIPAK THAKKAR, S MT MANJULABEN SACHDEV, SMT KINJALBEN THAKKAR, SHRI HIRALAL THAKKA R, SHRI SANJAY THAKKAR AND DHAIMADEV FINANCE PVT. LTD WITHIN THE S HORT SPAN OF THREE TO FOUR MONTHS. AS THE PROCEEDINGS IN ALL THE GROUP CONCERNS ALONG WITH THE APPELLANT WAS GOING ON SIMULTANEOUSL Y DUE TO LACK OF TIME CERTAIN DETAILS REQUIRED BY ASSESSING OFFICER COULD NOT BE PRODUCED IN TIME ALLOTTED. ALSO IT IS WORTHWHILE TO MENTION THAT WHATEVER DETAILS POSSIBLE IN FORM OF COPY OF ACCOUN T OF PARTIES, CONFIRMATION OF THE PARTIES, NAME, ADDRESS OF THE P ARTIES ETC WERE PRODUCED BEFORE THE ASSESSING OFFICER VIDE LETTER D ATED 15/12/06 WHICH WERE NOT CONSIDERED IN THE ASSESSMENT ORDER. AT PRE SENT WE CAN PRODUCE THE SAME BEFORE YOUR HONOUR AS ADDITIONAL E VIDENCES AND WHICH NEEDS TO BE ACCEPTED CONSIDERING THE FACTS NA RRATED EARLIER. AS FROM THE ABOVE NARRATION OF FACTS YOUR HONOUR WI LL AGREE THAT NO ADEQUATE OPPORTUNITY HAS BEEN GIVEN TO THE APPELLAN T TO PROVE HIS STAND BY GIVING EVIDENCES. SO ALL THE EVIDENCES WE WANT TO PRODUCE IN SUPPORT OF OUR GROUNDS OF APPEAL FILLED BEFORE YOUR HONOUR SHOULD BE ACCEPTED AS ADDITIONAL EVIDENCE BECAUSE OUR CASE CL EARLY FALLS UNDER FOLLOWING SUB-CLAUSE OF RULE 46A OF INCOME TAX RULE S 1962. '(D) WHERE THE ASSESSING OFFICER HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO TH E APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL.' 6 THUS CLAUSE (D) ABOVE SUPPORTS OUR PRAYER THAT ALL THE EVIDENCES WHICH ARE PRODUCED WITH THIS SUBMISSION NEEDS TO BE ACCEP TED BY YOUR HONOUR SO AS TO ARRIVE AT FAIR CONCLUSION ON THE IS SUES INVOLVED IN THE APPEAL. IT WAS FURTHER SUBMITTED THAT ACCEPTANCE OF DEPOSITS ETC. ARE THROUGH BANKING CHANNEL AND THE INFORMATION WAS ALR EADY AVAILABLE WITH AN INDEPENDENT AGENCY BANKS, BUT WAS NOT AVAIL ABLE TO THE APPELLANT AS RECORDS BEING OLD AND THERE BEING NO Q UESTION OF AFTER THOUGHT THESE EVIDENCES SHOULD BE ADMITTED. FURTHER IT IS WORTHWHILE TO MENTION THE NOTINGS OF BOMBAY HIGH COURT IN FAMOUS CASE OF PRABHAVATI S. SHAH V/S. CIT 231 1 TR 1 WHERE THE COURT HAS GONE ONE STEP FURTHER IN THE INTEREST OF THE JUSTICE BY OBSERVING THAT RULE 46A DOES NOT DEAL WITH THE POWE RS OF THE COMMISSIONER (APPEALS) TO MAKE FURTHER ENQUIRY AND IT ONLY PUTS RESTRICTION ON THE APPELLANT TO PRODUCE ADDITIONAL EVIDENCE. THE COMMISSIONER (APPEALS) HAS ENOUGH POWERS U/S 250(4) TO ASK FOR AND ACCEPT THE EVIDENCE WHICH HE FEELS NECESSARY SO AS TO PASS THE ORDER. FURTHER RECENTLY KERALA HIGH COURT IN CASE OF C.I.T V/S K. RAVINDRANATHAN NAIR 131 TAXMANN 743 HAS ALSO HELD T HAT CIT (APPEALS) HAVE APART FROM RULE 46A HAS ENOUGH POWER S BY VIRTUE OF SECTION 250(4) SO AS TO ADMIT ANY EVIDENCE WHICH HE FEELS NECESSARY FOR ARRIVING AT THE CONCLUSION ON THE GROUNDS OF AP PEAL FILLED BY THE APPELLANT. CONSIDERING THE FACTS OF OUR CASE THE DETAILS HEREU NDER SHOULD BE TAKEN INTO ACCOUNT BEFORE ARRIVING TO ANY DECISION BY YOU R HONOUR. KEEPING APART ABOVE SUBMISSION WHICH WE BELIEVE MAK ES OUR CASE CLEARLY ELIGIBLE FOR ACCEPTANCE OF ADDITIONAL EVIDE NCE IT IS WORTHWHILE TO MENTION THAT THE ASSESSING OFFICER HAS PASSED OR DER STAGING THAT IN RESPECT OF CASH CREDITS DISCUSSED BY HIM DETAILS WE RE NOT FURNISHED AND THERE WAS NON COMPLIANCE. IT IS -SUBMITTED THAT AS SUCH THERE WAS NO NON COMPLIANCE ON THE PART OF THE APPELLANTS. IT MA Y BE NOTED THAT FIRST NOTICE U/S 142 (1) REFERRED BY THE ASSESSING OFFICE R IS DATED 8/09/06 AND IN RESPONSE THERETO THE APPELLANT HAD FILED DETAILS AND COPIES OF ACCOUNTS WITH THE ASSESSING OFFICER. FURTHER THE AP PELLANT HAD ALSO GIVEN BEFORE ASSESSING OFFICER THE DETAILS VIDE LET TER DATED 15/12/06.' THE LEARNED CIT(A) HELD AS UNDER:- 7 6.2 HAVING HEARD TO ABOVE SUBMISSIONS I FOUND THA T AT THE TIME OF ASSESSMENT, THE APPELLANT WAS UNABLE TO FURNISH THE REQUIRED CONFIRMATIONS AND IT WAS FOR THE INADEQUATE TIME. M OREOVER, THE EVIDENCES WERE ALREADY AVAILABLE DUE TO THE TRANSAC TIONS BEING THROUGH BANKING CHANNEL THERE CANNOT BE AN ALLEGATION OF AF TER THOUGHT OR MANIPULATION. HENCE THE EVIDENCE PRODUCED BEFORE ME WERE ADMITTED FOR JUSTICE AND THE AO WAS GIVEN AN OPPORTUNITY TO VERIFY THE SAME AND FURNISH HIS COMMENTS ON THE SAID EVIDENCES. THEREAFTER, THE AO SUBMITTED REMAND REPORT DATED 22 -05-2007 WHICH WAS REPRODUCED IN HIS ORDER BY THE LEARNED CI T(A) FROM PAGES 8 TO 11. COPY OF REMAND REPORT WAS GIVEN TO THE AR OF THE ASSESSEE. THE AR OF THE ASSESSEE SUBMITTED AS UNDE R:- 'IN THE ASSESSMENT ORDER FOR THE ABOVE ASSESSMENT Y EAR ADDITIONS WERE MADE ON ACCOUNT OF CASH CREDITS AMOUNTING TO RS.3,5 4,70,163/-. AFTER CONSIDERING THE APPELLANT'S SUBMISSIONS, OUR HONOUR HAD DIRECTED THE A.O. TO GIVE HIS REMAND REPORT AND HE HAS SUBMITTED THE SAID REPORT DATED 22-5-2007 BEFORE YOUR HONOUR. HE HAS REPORTED BEFORE YOU THAT AGGREGATE AMOUNT OF CASH CREDITS IN RESPECT OF 10 P ERSONS OF RS.1,76,83,518/- ARE STILL, UNEXPLAINED. THIS AMOUN T INCLUDES MAJOR AMOUNT OF RS.1,70,11,830/- RECEIVED FROM SHREE HAD BUILDERS. THE A.O. HAS IN THE REMAND REPORT OBSERVED THAT RAJUBHA I BHURABHAI VAGHELA IS PROPRIETOR OF SHREE HARI BUILDERS AS WAS NOTICED IN THE COURSE OF ASSESSMENT PROCEEDINGS OF OTHER GROUP CAS ES. THOUGH HE WAS HAVING P. A. NO. HE HAD NOT FILED INCOME-TAX RE TURNS. THE A.O. HAS STATED THE APPELLANT HAS NOT PRODUCED THE DEPOS ITOR AND NOT FILED HIS CONTRA ACCOUNT OR COPY OF RETURN FILED BY HIM. HENCE IN HIS VIEW THE IDENTITY OF THE CREDITOR AND HIS CREDITWORTHINE SS IS NOT PROVED. THE APPELLANT SUBMITS THAT IN THE COURSE OF REMAND PROCEEDINGS THE ASSESSING OFFICER WAS PROVIDED COPY OF ACCOUNT OF T HE SAID PARTY, THEIR NAME AND ADDRESS, AND THEIR CONFIRMATION OF THE ACC OUNT. THE APPELLANT ALSO PROVIDED PA. NO. OF THE SAID PERSON. EVEN THE COPY OF BANK STATEMENT OF SAID PERSON IS ALSO FURNISHED WHE REIN THE ENTRIES CREDITED TO THEIR ACCOUNT IN THE BOOKS OF THE APPEL LANT ARE REFLECTED. THUS THE APPELLANT HAS EXPLAINED THE SOURCE OF THE SAID CREDITOR AND ALSO FURNISHED THE DETAILS TO SHOW THAT THE TRANSAC TION WAS GENUINE. THE PARTY CONFIRMED THE CREDITS GIVEN TO THE APPELL ANT. PARTYS PA NO. IS ALSO FURNISHED. CONSIDERING THESE ASPECTS, MEREL Y BECAUSE THE SAID PERSON COULD NOT BE PRODUCED OR THE APPELLANT COULD NOT FURNISH HIS 8 INCOME TAX RETURN, IT CANNOT BE HELD THAT THE CASH CREDIT IS NOT GENUINE OR THE CREDITWORTHINESS OF THE CREDITORS IS NOT EST ABLISHED. THE PA NO. ITSELF ESTABLISHES THAT THE CREDITOR WAS IDENTIFIAB LE. THE BANK TRANSACTION SHOWS THAT THE TRANSACTION IS GENUINE A ND IT HAS SOURCE. IT IS FURTHER STATED THAT EVEN OTHERWISE ALSO THE REAL AM OUNT CREDITED TO THE ACCOUNT OF THE SAID PARTY IS ONLY RS.42,60,747/- AS REPORTED IN THE R.R. AND NOT RS.1,70,830/-. CONSIDERING ALL THESE ASPECT S THE ADDITION DESERVES TO BE DELETED. SO FAR AS THE OTHER CREDITORS WHICH ARE STATED BY T HE A.O. AS NOT ESTABLISHED, IT MAY BE NOTICED THAT THE APPELLANT H AD FURNISHED THEIR CONTRA ACCOUNT AND CONFIRMATION AND ADDRESSES. MERE LY BECAUSE THE P.A. NO. IS NOT FURNISHED THE A.O. HAS GIVEN ADVERS E REPORT. IT IS SUBMITTED THAT THE TRANSACTIONS HAVING BEEN MADE TH ROUGH BANKING CHANNEL, THERE IS NO REASON FOR HOLDING IT AS NON-G ENUINE.' 5 AFTER CONSIDERING THE REMAND REPORT OF THE AO AND THE SUBMISSIONS MADE BY THE ASSESSEE, THE LEARNED CIT(A ) HAS DECIDED THE ISSUE WITH THE FOLLOWING OBSERVATIONS:- 6.4 I HAVE CONSIDERED THE ASSESSMENT ORDER, REMAND REPORT AND APPELLANT'S SUBMISSIONS. I FIND THAT THE A.O. HAS R EPORTED THAT OUT OF CASH CREDIT OF RS.3,54,70,163/- ADDED IN THE ASSESS MENT ORDER, HE HAS ACCEPTED EXPLANATION FOR CREDITS OF RS.1,77,86,64S/ -. IN SO FAR AS AMOUNT OF RS.1,76,83,518/- IS CONCERNED, IT INCLUDE S CREDIT OF RS.1,70,11,830/- RECEIVED FROM HAN BUILDERS WHICH I S PROPRIETARY CONCERN OF RAJUBHAI B. VAGHELA. THE SAID PERSON HA S GIVEN CONFIRMATION, HIS PA NO AND HIS BANK STATEMENT. I N THE CIRCUMSTANCES, MERELY BECAUSE THAT MAN HAS NOT FILE D HIS RETURN, HIS DEPOSIT CAN NOT BE HELD AS UNEXPLAINED IN THE HANDS OF APPELLANT. THUS I HOLD THAT THIS AMOUNT IS FULLY EXPLAINED. ACCORDI NGLY I ORDER FOR DELETING ADDITION OF RS.3,47,98,475/- (RS.1,77,86,6 45/- + 1,70,11,830/-). IN RESPECT OF OTHER CREDITORS THE A PPELLANT HAS NOT FILED ANY EVIDENCE, EXCEPT COPIES OF ACCOUNT OF DEPOSITOR S AND THE FACT THAT DEPOSITS ARE RECEIVED BY CHEQUE. HENCE, SUCH BALANC E AMOUNT OF DEPOSIT OF RS.6,71,688/- IS RIGHTLY ADDED AND ADDIT ION TO THAT EXTENT IS CONFIRMED. APPELLANT GETS RELIEF OF RS.3,47,48,475/ -. 9 6 AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. THE LEARNED DR SUPPORTE D THE ORDER OF THE AO. 7 THE LEARNED COUNSEL OF THE ASSESSEE REITERATED TH E SUBMISSIONS MADE BEFORE THE LEARNED CIT(A). THE LEA RNED COUNSEL OF THE ASSESSEE ALSO RELIED UPON THE DECISI ONS OF THE HONBLE GUJARAT HIGH COURT IN THE CASES OF CIT VS. PRAGATI CO- OPERATIVE BANK LTD. (2005) 278 ITR 170 (GUJ) AND DA HOD SAHAKARI KHAND VECHAN SANGH LTD. VS. CIT (2006) 282 ITR 321 (GUJ). 8 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS. WE HAVE ALSO GONE THROUGH VARIOUS DECISIONS REFERRED T O BY THE LEARNED COUNSEL OF THE ASSESSEE. WE FIND THAT THE A DDITION OF RS.3,54,70,163/- WAS MADE BY THE AO ON ACCOUNT OF C ASH CREDITS IN RESPECT OF DEPOSITS IN THE NAMES OF 52 DIFFERENT PERSONS IN THE BOOKS OF THE ASSESSEE. WE FURTHER FIND THAT THE ASS ESSEE HAS FURNISHED COPIES OF ACCOUNT OF HIS PERSONAL BOOKS, BANK ACCOUNTS, ETC. WE FURTHER FIND THAT IN THE COURSE OF REMAND P ROCEEDINGS, THE AO WAS PROVIDED COPY OF THE ACCOUNTS OF THESE PARTI ES, THEIR NAMES AND ADDRESSES, AND THEIR CONFIRMATION OF THE ACCOUNTS. THE ASSESSEE ALSO PROVIDED PAN NUMBERS OF THESE PERSONS ALONG WITH THE COPY OF BANK STATEMENTS. THE AMOUNTS WERE RECEI VED BY ACCOUNT PAYEE CHEQUES. THE AO IN HIS REMAND PROCEED INGS WAS OF THE VIEW THAT AMOUNT OF RS.1,76,83,518/- WERE NO T SATISFACTORILY EXPLAINED BY THE ASSESSEE. THESE AMO UNTS INCLUDED THE SUM OF RS.1,70,11,830/-. THE LEARNED CIT(A) HOW EVER WAS OF 10 THE VIEW THAT SINCE IN RESPECT OF THIS AMOUNT THE C REDITOR HAS GIVEN HIS PA NUMBER, CONFIRMATION AND HIS BANK STAT EMENT, THE DEPOSIT CANNOT BE TREATED AS UNEXPLAINED. WE ALSO F EEL THAT SINCE THIS AMOUNT HAS COME TO THE ASSESSEES ACCOUNT THRO UGH BANKING CHANNELS WHICH IS VERIFIABLE FROM THE BANK STATEMEN T OF THE CREDITOR (WHICH IS ON RECORD), THE SOURCE OF THE CR EDIT AND GENUINENESS OF THE TRANSACTION IS ESTABLISHED. THE IDENTITY OF THE PERSON IS ALREADY ESTABLISHED AS HE IS HAVING PA NU MBER. IN REBUTTAL OF THIS POSITION, NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE. THEREFORE, WE ARE NOT INCLINED TO INTE RFERE WITH THE ORDER OF THE LEARNED CIT(A) AND THE SAME IS HEREBY UPHELD. GROUND NOS.4 AND 5 OF THE REVENUES APPEAL ARE DISM ISSED. 9 GROUND NOS.6 AND 7 RELATE TO DELETION OF AN ADDIT ION OF RS.1,44,56,390/-, THE FACTS AS NOTED BY THE LEARNED CIT(A) ARE AS UNDER:- 8 NEXT ADDITION DISPUTED OF RS.1,44,56,390/-WHICH MADE ON THE BASIS OF PAGE NO. 138 AND 139 OF ANNEXURE A-20 OF T HE LOOSE PAPER FILE. THE DETAILS OF ANNEXURE ARE REPRODUCED ON PAG E NOT 13 AND 14 OF THE ASSESSMENT ORDER. IT IS NOTED BY THE A.O. THAT THE APPELLANT HAD IN T HE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 1999-2000 TO 2004-0 5 IN RESPONSE TO SPECIFIC QUERY EXPLAINED THAT THE TRANSACTIONS DID NOT PERTAIN TO THOSE YEARS. IT WAS FURTHER EXPLAINED BEFORE HIM THAT THE NOTINGS REFERRED TO IN THE SAID ANNEXURE WERE DULY REFLECTED IN THE BOO KS OF ACCOUNT IN THE CONCERNED ASSESSMENT YEAR. THE A.O. HAS IN PARA 10. 2 REPRODUCED THE NOTINGS ON PAGE 138 TO PAGE 139 OF ANNEXURE A-20 AN D STATED THAT THE SAME WERE FOUND AND IMPOUNDED FROM THE OFFICE OF TH E DHARAMDEV FINANCE PVT. LTD, THE TOTAL OF THE RECEIPT COMES TO RS.1,38,00,000/-. IT IS FURTHER STATED THAT DARAMDEV FINANCE FURTHER REC EIVED INTEREST AND THUS THE TOTAL RECEIPTS COMES TO RS.1,39,00,900/-. THE BALANCE ON PAGE 138 IS BROUGHT FORWARD AS OPENING BALANCE OF PAGE 1 39. THEREAFTER RS.5 LAKH HAS BEEN RECEIVED ON 1-12- . IT IS FURTHE R STATED THAT ON THIS 11 PAGE ALSO NOTINGS ABOUT INTEREST RECEIVED OF RS.5,5 5,490/- IS MADE, THUS TOTAL RECEIPT AS PER PAGE 138 IS OF RS.5,55,49 0/-. THUS ON THE BASIS OF THIS NOTINGS IT IS STATED THAT DHARAMDEV F INANCE HAS RECEIVED TOTAL AMOUNT OF RS.L,44,56,390/-. IT IS FURTHER OB SERVED BY THE A.O. AS PER PAGE 139 AMOUNT OF RS.50 LAKH IS SHOWN AS ADVAN CE GIVEN TO RAKESHBHAI AND, THEREFORE, THE APPELLANT WAS ASKED TO EXPLAIN THIS. IT IS STALED THAT THE APPELLANT HAD EXPLAINED BEFORE THE A.O. THAT THE CASH TRANSACTION AS PER THESE PAGES HAD TAKEN PLACE BETW EEN THE PROPRIETARY CONCERN SATYA DEVELOPERS AND HIS INDIVIDUAL CAPACIT Y AND THAT THESE TRANSACTIONS ARE DULY REFLECTED IN THE BOOKS OF ACC OUNT OF SATYA DEVELOPERS AND HIS PERSONAL SET OF BOCKS. THESE CON TENTIONS ARE NOT ACCEPTED BY THE A.O. ON THE GROUND THAT IF THE TRAN SACTIONS ARE BETWEEN THE PROPRIETARY CONCERN AND INDIVIDUAL, WHAT WAS NE CESSITY OF RECORDING TRANSACTIONS IN THE BOOKS AND CHARGING IN TEREST ON SUCH TRANSACTIONS. THE APPELLANT HAS NOT SHOWN THAT SIMI LAR TRANSACTIONS HAD ARISEN BETWEEN PROPRIETARY CONCERN OF THE ASSESSEE AND HUGE INTEREST WAS CHARGED IN EARLIER YEAR. HE HAS ALSO REFERRED T O CERTAIN NAMES LIKE BHARATBHAI, PULIN, SUSHEELABEN, ELECTRICITY BILLS E TC. AND STATED THAT THE APPELLANT COULD NOT EXPLAIN THE NATURE OF THESE TRA NSACTIONS. IF IT WAS BETWEEN THE TWO PROPRIETARY CONCERNS THE ABOVE NAME COULD NOT HAVE APPEARED. IT IS, THEREFORE, STATED BY THE A.O. THAT THE ENTRIES ARE INCORPORATED IN THE PERSONAL BOOKS AS CASH RECEIVED AND PAID AND THUS HAS TRIED TO HIDE THE TRUE NATURE OF TRANSACTIONS A ND THE EXPLANATION GIVEN BY THE ASSESSEE IS REJECTED. IT IS STATED THA T IN THE CASE OF DHARAMDEV FINANCE, THAT CONCERN IS ENGAGED IN THE B USINESS OF FINANCE AND, THEREFORE, IT WAS HELD THAT THIS AMOUN T BELONGS TO THAT CONCERN AND THEREFORE, THE ADDITION IS MADE IN THAT CASE AS UNDISCLOSED INCOME FOR THE ENTIRE AMOUNT OF RS.1,44,56,390/-. T HE EXPLANATION OF THE ASSESSEE IS REJECTED AND IT IS HELD THAT THE TR ANSACTIONS ON THESE PAGES ARE IN RESPECT OF BUSINESS OF FINANCE OF DHAR AMDEV FINANCE PVT. LTD. HENCE ADDITION IS MADE FOR THAT AMOUNT IN ITS CASE, FOR THE SAME AMOUNT ADDITION IS MADE ON PROTECTIVE BASIS IN THE CASE OF HIRALAL THAKKAR. 8.1 THE APPELLANT IN THIS CONNECTION SUBMITTED AS U NDER' 'IT IS SUBMITTED THAT MERELY BECAUSE LOOSE PAPERS W ERE FOUND FROM THE ASSESSEE'S PREMISES IT CANNOT LEAD TO THE INFERENCE THAT IT REPRESENTED CONCEALED TRANSACTION OF AN ASSESSEE. SUCH INFERENC E COULD BE MADE ONLY AFTER IDENTIFICATION AND VERIFICATION. THIS MA Y BE APPRECIATED IN VIEW OF THE ITAT DECISION OF THE CASE OF GOYAL (SP) VS. DCIT REPORTED AT 269 ITR 49G (HP). SIMILAR VIEW WAS ALSO EXPRESSED BY THE 12 AHMEDABAD TRIBUNAL IN THE CASE OF DABROS MACHINERY MANUFACTURERS PVT. LTD. 269 ITR 36 (AT). IT MAY BE APPRECIATED TH AT IN VIEW OF THE ABOVE LEGAL POSITION, THE ADDITION ON THE BASIS OF LOOSE PAPER WITHOUT ESTABLISHING IT TO REPRESENT APPELLANT'S UNACCOUNTE D INCOME IS UNJUSTIFIED. WITHOUT PREJUDICE TO THE ABOVE CONTENTIONS IT MAY B E APPRECIATED THAT THE APPELLANT AND RAKESH THAKKAR'S CASE WERE TAKEN UP SIMULTANEOUSLY AND IT WAS EXPLAINED THAT THESE TRANSACTIONS ARE PE RTAINING TO SATYA DEVELOPERS ARID ARE DULY RECORDED IN THEIR BOOKS. C OPIES OF RELEVANT ACCOUNT FROM THE BOOKS OF SATYA DEVELOPERS AND FROM THE BOOKS OF RAKESH THAKKAR INDIVIDUAL WERE PRODUCED. THUS THE T RANSACTIONS ARE DULY RECORDED IN THE BOOKS OF RAKESH THAKKAR AND HI S PROPRIETARY CONCERN. MERELY BECAUSE THE PAGES ARE FOUND FROM TH E PREMISES OF THE APPELLANT FIRM WHICH IS A GROUP CONCERN THE PRESUMP TION MADE BY THE A.O. FOR MAKING ADDITION IN HIS HANDS IS NOT JUSTIF IED. IT IS NOT THE CASE OF THE A.O. THAT THE TRANSACTIONS ARE NOT RECORDED IN THE BOOKS OF SATYA DEVELOPERS. ONLY DOUBT HE CREATES IS THAT THE TRANS ACTIONS BETWEEN THE INDIVIDUAL AND HIS PROPRIETARY CONCERN AND THAT THE RE CANNOT BE SUCH TRANSACTIONS BETWEEN INDIVIDUAL AND HIS PROPRIETARY CONCERN. HE HAS FAILED TO APPRECIATE THAT WHEN THE BOOKS OF INDIVID UAL AND HIS BUSINESS CONCERN ARE SEPARATELY MAINTAINED TRANSACTION BETWE EN THE TWO HAVE TO BE RECORDED IN RESPECTIVE BOOK. THIS OBSERVATION OF THE A.O. IS THUS UNJUSTIFIED. IT MAY BE STATED THAT THE ADDITION IS MADE IN THE HANDS OF THE APPELLANT FIRM ON SUBSTANTIVE BASIS AND IN THE HANDS OF HIRALNL THAKKAR ON PROTECTIVE BASIS. THUS EVEN ON HIS OWN P RESUMPTION, THE ASSESSING OFFICER IS NOT SURE ABOUT THE ENTITY WHO IS TO BE TAXED. AS EXPLAINED ABOVE, THE TRANSACTIONS ARE DULY RECORDED IN THE BOOKS OF SATYA DEVELOPERS AND HENCE IT CANNOT BE CONSIDERED AS UNEXPLAINED INCOME OF THE APPELLANT. THE APPELLANT MAY ALSO STATS THAT THE FACT THAT THE SAID LOOSE PAPER PERTAINS TO THE TRANSACTIONS OF SATYA DEVELOPERS WA S EXPLAINED FROM TIME TO TIME TO THE DEPARTMENT. NO SPECIFIC STATEME NT WAS RECORDED WHICH SHOWS THAT ANYWHERE THE DEPARTMENT FOUND THAT THE LOOSE PAPER PERTAINS TO THE APPELLANT AND NOT SATYA DEVELOPERS. THE A.O. HAS AT ONE PLACE REFERRED TO THE ENTRIES I N THE NAME OF BHARATBHAI PULINBHAI, ELECTRIC BILL OF RATANBHAI ET C. NOTED IN THE LOOSE PAPER AND STATED THAT IF IT WAS INTER FIRM TRANSACT ION THE ABOVE NAMES WOULD NOT HAVE BEEN REFLECTED IN THE LOOSE PAPER. I T IS ALSO STATED BY HIM THAT NOWHERE THE NAME OF SATYA DEVELOPERS IS WR ITTEN. WITH 13 REFERENCE TO THIS, IT MAY BE STATED THAT BHARATBHAI PULINBHAI ETC. HAD MADE BOOKING AND GIVEN BOOKING ADVANCE IN DEV TIR TH FLATS OF SATYA DEVELOPERS WHICH WAS CANCELLED AND HENCE THE ENTRIE S ARE IN THEIR NAMES IN LOOSE PAPERS AND ARE REFLECTED IN THE BOOK S OF SATYA DEVELOPERS. THUS THIS INFERENCE OF THE A.O. IS WITH OUT APPRECIATING THE FACTS OF THE CASE. THE ASSESSING OFFICER HAS OBSERVED THAT AT THE TIME OF SEARCH BOOKS OF ACCOUNTS WERE INCOMPLETE AND THAT, THEREFORE, THESE TRANSACTIONS ARE INCORPORATED IN THE PERSONAL BOOKS. IT MAY BE APPRE CIATED THAT THIS INFERENCE IS ONLY BASED ON PRESUMPTION. THE ALLEGAT ION MADE ABOUT THE ENTRIES SO INCORPORATED IS NOT PROVED. THE A.O. IS THUS NOT JUSTIFIED IN MAKING SUCH WILD ALLEGATION WITHOUT ANY PROOF.' 10 AFTER CONSIDERING THE AFORESAID SUBMISSIONS MADE BY THE ASSESSEE, THE LEARNED CIT(A) DELETED THE ADDITION W ITH THE FOLLOWING OBSERVATIONS:- 8.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE ABOVE SUBMISSIONS. FORM THE SUBMISSIONS MADE BEFORE THE A .O. AND ALSO BEFORE ME IT IS FOUND THAT THE APPELLANT HAS EXPLAI NED THAT THE NOTINGS IN THESE LOOSE PAPERS PERTAIN TO SATYA-DEVELOPERS, THE PROPRIETARY CONCERN OF RAKESH THAKKAR AND THAT TRANSACTIONS ARE RECORDED IN THE BOOKS OF SATYA DEVELOPERS AND RAKESH THAKKAR INDIVI DUAL, AS THE TRANSACTIONS ARE BETWEEN THOSE TWO ENTITIES. THE AS SESSING OFFICER HAS MADE THE PRESUMPTION THAT THE LOOSE PAPER WAS FOUND FROM THE OFFICE PREMISES OF DHARAMDEV FINANCE PVT. LTD. AND HENCE I T WAS FINANCE TRANSACTIONS OF THIS CONCERN. AS AGAINST THIS THE A PPELLANT HAS CLEARLY SHOWN THAT THE TRANSACTIONS ARE BETWEEN RAKESH THAK KAR INDIVIDUAL AND HIS PROPRIETARY CONCERN SATYA DEVELOPERS. COPIE S OF, ACCOUNT ARE ALSO FURNISHED. THIS FACT IS ALSO EXPLAINED BY RAKE SH THAKAR IN HIS INDIVIDUAL CASE. THE A.O. WAS, THEREFORE, NOT JUSTI FIED IN MAKING THE ADDITION IN THE CASE OF THE APPELLANT ON THE BASIS OF THESE LOOSE PAPERS. THE ISSUES RAISED HERE ARE DISCUSSED IN THE APPELLA TE ORDER IN THE CASE OF RAKESH THAKKAR FOR AY 2005-06 WHERE THE A.O. HAD MADE ADDITIONS OF RS.50 LAKH ON THE BASIS OF THE SAME LO OSE PAPER AND I HAVE DELETED SUCH ADDITION IN THAT CASE. AS DISCUSSED IN THE SAID ORDER, AS THE TRANSACTIONS ARE DULY RECORDED IN THE BOOKS OF SATYA DEVELOPERS AND RAKESH THAKKAR AND THAT THE BOOKS ARE AUDITED U NDER THE PROVISIONS OF SECTION 44AB, THE A.O. WAS NOT JUSTIF IED IN CHARGING THE 14 EXPLANATION OF THE APPELLANT. KEEPING IN VIEW THE E NTIRE FACTS OF THE APPELLANT'S CASE, THE ADDITION MADE IS ACCORDINGLY DELETED. 11 BEFORE US, THE LEARNED DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES. THE LEARNED COUNSEL OF THE ASSESSEE, O N THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE THE LE ARNED CIT(A) AND SUPPORTED THE ORDER OF THE LEARNED CIT(A). 12 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORD. WE FIND THAT THE AO HAS MADE THIS ADDITION ON THE BASI S OF LOOSE PAPERS FOUND FROM THE OFFICE PREMISES OF THE ASSESS EE DHARAMDEV FINANCE PVT. LTD. AND THEREFORE TREATING THEM AS TR ANSACTIONS OF THE ASSESSEE. THE ASSESSEES CONTENTION HAS CONSIST ENTLY BEEN THAT THESE LOOSE PAPERS DID NOT BELONG TO HIM AND THESE TRANSACTIONS ARE RELATING TO M/S SATYA DEVELOPERS AND THE PROPRI ETOR SHRI RAKESH THAKKER IN HIS INDIVIDUAL CAPACITY. THIS FAC T WAS ALSO ADMITTED BY SHRI RAKESH THAKKAR IN HIS INDIVIDUAL C APACITY. THE LEARNED CIT(A) HAS FOUND THIS FACT TO BE CORRECT AS BEFORE HIM THE CASE OF SHRI RAKESH THAKKAR ALSO CAME IN APPEAL AND IN THAT CASE OF SHRI RAKESH THAKKAR, THE LEARNED CIT(A) FOUND TH AT THE TRANSACTIONS IN THE PAPERS FOUND IN THE ASSESSEES PREMISES ON THE BASIS OF WHICH THIS ADDITION HAS BEEN MADE, WERE RE CORDED IN THE AUDITED BOOKS OF SHRI RAKESH THAKKAR AND, THEREFORE , HE WAS OF THE VIEW THAT THE ADDITION CANNOT BE MADE IN THE HA NDS OF THE ASSESSEE ON THE BASIS OF THESE LOOSE PAPERS. NOTHIN G WAS BROUGHT ON RECORD BY THE REVENUE TO THE CONTRARY BEFORE US BY THE REVENUE AND THEREFORE, WE ARE NOT INCLINED TO INTER FERE WITH THE ORDER OF THE LEARNED CIT(A). THE SAME IS HEREBY UPH ELD. THESE GROUNDS RAISED BY THE REVENUE ARE ALSO DISMISSED. 15 13 GROUND NOS.8 AND 9 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 14 IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 29-02-2012 SD/- SD/- (A MOHAN ALANKAMONY) ACCOUNTANT MEMBER (D K TYAGI) JUDICIAL MEMBER DATE : 29-02-2012 COPY OF THE ORDER FORWARDED TO: 1. DHARAMDEV FINANCE PVT. LTD., E/4, GHANSHYAM PARK , ANAND NAGAR SOCIETY, FATEHPURA, PALDI, AHMEDABAD 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL C IRCLE- 1(1), AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-I, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-C, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD